Johannesburg - With new-car prices roaring upwards on the back of volatile exchange rates, the trend for South African consumers to opt for used cars is increasing, say vehicle pricing analysts TransUnion.
After climbing to 1.53 used vehicles for every new passenger and light commercial vehicle financed at the start of the year, the ratio continued to move in favour of used cars in the second quarter at 1.67 units being financed to one new vehicle. At the end of last year, this ratio was at 1.25 to 1.
After rising out of negative territory for the first time in more than a year to 0.83 percent in the first quarter, used-car inflation dropped slightly to 0.58 percent in the second quarter. At the same time, new-car inflation is moving rapidly in the other direction. It rose from 5.62 and 6.58 percent in the previous two quarters, to 7.01 percent in the second quarter.
“We anticipate this trend will persist as new-car prices continue to rise, although not as sharply as they have thus far this year. Used prices are likely to keep on drifting,” says Transunion’s Keith Dye.
“Meanwhile, overall demand for new and used vehicles is set to remain sluggish for the foreseeable future, given the fragile state of consumer credit health.
“Banks are likely to maintain their tight grip on credit extension in the wake of the credit amnesty, making it more difficult for people to buy big-ticket items such as vehicles.”
TransUnion calculates the Vehicle Pricing Index based on monthly sales returns from thousands of dealers throughout the country, as well as vehicle financing registrations from all of the major banks and vehicle-finance houses.